Radhika Desai, Professor in the Department of Political Studies at the University of Manitoba and Visiting Professor in the Department of International Development at the London School of Economics, spoke to CGTN Europe about Trump’s tariffs and their global impact.
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00:00financial market disruptions could we expect in other countries such as the UK?
00:04Undoubtedly for Canada and Mexico this is not a light matter. They are the most deeply implicated
00:10and in terms of a side you know China is also almost equally deeply implicated but China is a
00:16much bigger economy but Canada and Mexico in terms of their relative importance of the trade to the
00:23United States it's much higher for them so they're going to have a nasty shock they may suffer a
00:27recession but the point is that discussions are underway and I'm paying more attention to Canada
00:33than Mexico but I have no doubt similar discussions are taking place in Mexico about essentially using
00:39this moment not to just respond to an emergency but to conduct a transformation of Canada's
00:47relations with the rest of the world economy and I think that this transformation is already
00:52occurring like I say within Canada important changes are occurring so that's why I say that
00:57the broader implications will be much more for the US and they will be much more adverse than
01:06Trump imagines and I also suspect that as a result I think Trump's course in this trade war
01:13is going to be anything but straight. I think he's going to have to do some pretty fancy footwork
01:18to avoid the worst results of what he's proposing and you asked what would be the some of the
01:25implications for I think US financial markets and so on I would say that it is very likely
01:31that financial markets are not going to like this there may be direct impacts on falls in the stock
01:38markets as indeed we saw last week already and that is not going to be liked by the enormous
01:45by the small number of people who hold so much political power in the United States whose wealth
01:51rests on these markets being up and the second reason that markets are not going to like it is
01:57that invariably contrary to what Trump says the cost of these tariffs will be borne by American
02:04consumers this will lead to inflation going up this will prevent the Federal Reserve from lowering
02:11interest rates and unless the Federal Reserve is able to lower interest rates the wealth of the
02:17really wealthy in the United States which rests on borrowing cheaply from banks in order to engage
02:26in leverage trading of vast quantities of money in various asset markets this wealth will eventually
02:33diminish and you may even see potentially a financial market crash if the Federal Reserve
02:38is not able to contain inflation and not able to decrease interest rates.